Pressure builds on Congress from all sides to prevent spike in student loan rate

View full sizeThe Associated PressNorthern Arizona University freshman Tyler Dowden, 18, speaks during a news conference on Capitol Hill, March 13, to announce the collection of over 130,000 letters to Congress to prevent student loan interest rates from doubling this July. The effort has the support of both President Obama and Republican Mitt Romney.

WASHINGTON - The White House intensified a demand Monday that Congress intervene to prevent interest rates on a popular college loan from doubling on July 1.

The coordinated effort involves visits by President Barack Obama to college campuses in North Carolina, Colorado and Iowa this week to pressure Congress to extend a law that capped interest rates on Stafford college loans at 3.4 percent. If Congress fails to act the rate will jump to 6.8 percent.

For Oregon, that means rates for 119,220 students will increase by $971 over the term of the loan if the law isn't extended, the White House said.

In all, more than 7 million students will face higher costs, with most of those students coming from middle class families that are already struggling to pay the cost of college, White House officials said.

"There is no reason to add to their burden," White House domestic policy adviser Cecilia Munoz said Monday in a conference call with reporters. College graduates today, she said, carry $25,000 in debt and college loans on average and the amount of student debt owed by Americans now exceeds total credit-card debt.

A college education, she said, "is a clear path to the middle class. … A university education is incredibly important for economic outcomes for these students," she said.

The effort to keep interest rates in check for Stafford loans is only one element in a White House campaign to keep college costs in check and make higher education available. Obama warned in his State of the Union address that his administration would consider penalizing schools where tuition rises faster than the average.

Extending the law that was first passed in 2007 will cost $6 billion, according to the Congressional Budget Office. Munoz and supporters in Congress said they would be able to identify savings in other accounts to offset the cost.

There is also a political component to the effort.

Obama campaign officials estimate about 8 million voters between the ages of 18 and 21 weren't old enough to vote in 2008 but could be swayed to support the president this time. Whether students will vote in large numbers for Obama again will depend on how their personal finances stack up against others since college graduates have faced high levels of unemployment.

Mitt Romney, the all but certain GOP nominee for president, agreed with Obama.

"With the number of college graduates who can't find work, or who can only find work well beneath their skill level, I fully support the effort to extend the low interest rate on student loans," he said Monday at a campaign event in Astor, Pa.

“Bad policy based on lofty campaign promises has put us in an untenable situation. We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers," he said in an April 20 statement.

"My colleagues and I are exploring options in hopes of finding a responsible solution that serves borrowers and taxpayers equally well," he said.